Money - Personal and business

[growler]

I have a couple of questions regarding money and business.

I am here on an investment visa with a company bank acct but have not yet opened a personal acct. My questions are as follows:

1) If I were to sell my property, could I put the money into my business acct and if so, what problems am I likely to encounter later.

2) Can I purchase a property in my company name using money from the sale of my personal property (after paying CGT of course).

3) Can a property or land be transferred into my company and if so, is it a difficult or expensive process.

Thanks

 

[mikesmith]

Hi,
In answer to your questions;

1)Yes you may deposit money from a personal property sale into your company account as long as the money is transfered directly from your personal bank account.Your accountant just needs to make an additivo(costing300rs)on the social contract stating increase in capital.

2)You can purchase a property in your company name from proceeds of a personal property sale in the form above.

3) A property can be transfered into your companies name.It is not difficult.A client of mine did this last month in order to reduce the capital gains tax burden for a land parcel he was selling.He had to pay the notary fees for issuing a new deed plus registration fee plus lawyer fee.Total cost of around 5000reals.

Your accountant/lawyer should be able to clarify you all this information.

Best of luck,Mike

 

[mikesmith]

Hi,
In answer to your questions;

1)Yes you may deposit money from a personal property sale into your company account as long as the money is transfered directly from your personal bank account.Your accountant just needs to make an additivo(costing300rs)on the social contract stating increase in capital.

2)You can purchase a property in your company name from proceeds of a personal property sale in the form above.

3) A property can be transfered into your companies name.It is not difficult.A client of mine did this last month in order to reduce the capital gains tax burden for a land parcel he was selling.He had to pay the notary fees for issuing a new deed plus registration fee plus lawyer fee.Total cost of around 5000reals.

Your accountant/lawyer should be able to clarify all this information for you.

Best of luck,Mike

 

[growler]

Thanks Mikesmith, very interesting.

Regarding Q1 and Q2, I don't have a personal account in Brazil, so are you saying that if I sold my property tomorrow I couldn't simply deposit the money directly into my company account?

I must admit I have been very reluctant to open an account having heard so many stories of the difficulties of doing so (it was bad enough opening the company one).

Regarding Q3, I guess an accountant could do this too?

You said,
"A client of mine did this last month in order to reduce the capital gains tax burden for a land parcel he was selling."
I guess this would depend on the amount of profit involved, 15% CGT on the profit against 6% (I believe) on the total selling price?

 

[mikesmith]

Hi again,
)The issue is how you deposit the money into your company account from the property sale?If the money is transferred via a bank transfer it will need to be from an account in your name.
)If you have a permanent visa you can open a personal bank account easily.Just need the normal doks.If you are on a tourist visa you cannot.
)A property lawyer would be more suited to transfer property deeds into your companies name.
)You are exactly right about the capital gains differencial between company/personal sale of property

Best of luck,Mike

 

[jeduardo]

15% CGT is the base rate but what you actually pay after automatic deductions is only 6% and this is for a personal sale.
If you doubt this, download the form and fill it out yourself at:
Programa de Apurao dos Ganhos de Capital - GCAP2009
I would not be surprised if a lawyer or accountant charged you 15% and pocketed the difference as well as charging you a fee.

 

[growler]

Thanks Jeduardo, very interesting. I tried the link a few times but it didn't work. No matter, can you briefly say what the "automatic deductions" are? I was only aware of deductions being possible for improvements made which obviously aren't done automatically.

I have seen mention somewhere else recently about reducing CGT down to 6%. If this is the case then it is going to make a big difference to the actual amount I end up with.

Hi again mikesmith, thanks for your input. Made me think again though about your client who switched ownership, as 6% of the profit must be less than 6% of the sale price? Now I am confused!!!

 

[DGM42]

There are so many people on this forum saying non residents cannot open bank accounts, and lots on here have opened one.
Maybe this will help to clarify
Non-resident foreigners in Brazil may hold local currency accounts in Brazil, subject to Heading 1, Chapter 13, Section 1 of the International Capital and Foreign Exchange Market Regulations (Regulamento do Mercado de Câmbio e Capitais Internacionais) of the Central Bank of Brazil.

Foreigners who are temporarily resident in Brazil can hold foreign currency accounts, subject to Heading 1, Chapter 14, Section 7 of the International Capital and Foreign Exchange Market Regulations (Regulamento do Mercado de Câmbio e Capitais Internacionais) of the Central Bank of Brazil.

 

[topshotta]

Mikesmith or anyone else, maybe you will know the answer to this question also.

2 people have a Brazilian company/Brazilian company bank account and are the only 2 socios of that company, the same 2 people own a Brazilian property 50/50, (personally-not in the company name),if that property is sold, can the funds be sent directly to the company bank account as the company is owned by the 2 people that own the property?Or would the funds have to be sent to personal bank accounts?

Many thanks

 

[topshotta]

15% CGT is the base rate but what you actually pay after automatic deductions is only 6% and this is for a personal sale.
If you doubt this, download the form and fill it out yourself at:
Programa de Apurao dos Ganhos de Capital - GCAP2009
I would not be surprised if a lawyer or accountant charged you 15% and pocketed the difference as well as charging you a fee.

Jeduardo would be grateful if you could explain how these "automatic" reductions work as as someone else said teh link does not work.

Thanks

 

[jeduardo]

Jeduardo would be grateful if you could explain how these "automatic" reductions work as as someone else said teh link does not work.

Thanks

CGT Example: a property purchased in 1986 for R$5000 selling for R$900,000 in 2008, your capital gains using GCAP program will be R$49560 which works out to be 5.5%.
See this post for screenshot of actual Form with calculated deductions:
http://www.propertyforum.com/forum/83171-post53.html

The links for the Receita Federal GCAP program again are:
Programa de Apurao dos Ganhos de Capital - GCAP2009
Programa de Apurao dos Ganhos de Capital - GCAP2009
http://www.receita.fazenda.gov.br/publico/programas/irpf/2009/gcap/***/gcap2009v1.0.exe

 

[Blc]

There are so many people on this forum saying non residents cannot open bank accounts, and lots on here have opened one.
Maybe this will help to clarify
Non-resident foreigners in Brazil may hold local currency accounts in Brazil, subject to Heading 1, Chapter 13, Section 1 of the International Capital and Foreign Exchange Market Regulations (Regulamento do Mercado de Câmbio e Capitais Internacionais) of the Central Bank of Brazil.

Foreigners who are temporarily resident in Brazil can hold foreign currency accounts, subject to Heading 1, Chapter 14, Section 7 of the International Capital and Foreign Exchange Market Regulations (Regulamento do Mercado de Câmbio e Capitais Internacionais) of the Central Bank of Brazil.

Tell us one bank in Brazil that will open a bank account for clients holding a tourist visa it is not possible.. name the bank the branch and the city .. Some non residents do have accounts they managed to open simple ones some years ago but lately it is not possible....... untill i got my visa i tried for 6 years no luck and belive me I tried everything..

 

[jeduardo]

Tell us one bank in Brazil that will open a bank account for clients holding a tourist visa it is not possible.. name the bank the branch and the city .. Some non residents do have accounts they managed to open simple ones some years ago but lately it is not possible....... untill i got my visa i tried for 6 years no luck and belive me I tried everything..

Almost impossible but I got mine in following manor:

Buy stuff through Internet and pay via Boleto at Lottery store with no need for Bank account. The good news is that purchasing big ticket items by Boleto will eventually get you calls by phone/mail offering credit cards. Buy from well-known vendors such as Americanas, Submarino, PontoFrio, Casa&Video, etc and they will sell your name and phone number to other banks. I got my Hipercard and Itaucard that way. And the frosting on the cake is when I got a call from UniBanco offering me a checking account with Visa/MasterCard; no proof of income or RNE was required. Use the cards and over time they will bump your credit limit.
So...if you are not in a hurry this works and certainly better than complaining or saying that it just can't be done. BTW, you will have to speak enough Portuguese so that you can accept these offers.

 

[DGM42]

Well as I have said on many occasions, I must be one of the lucky ones.
I opened my account last year at Banco do Brasil in Belo Horizonte.
I visit Brasil at least 6 times a year to see my fiancee. We went and got me a CPF then a declaration of residence signed and witnessed at the local government office stating my Fiancee's address as my residence when I am in Brasil.
We then went to Banco do Brasil with these and my UK passport - don't need a tourist visa they just stamp your passport and opened a bank account no problem. I then got my debit card sent and when I went back to UK went to Banco do Brasil in London and they set me up with a paying in book using Nat West as the UK clearing bank to transfer funds to my account in Brasil which I do regularly.
Then when in Brasil I either use this account or my UK Nationwide account or Credit card as with these you pay no charges if used outside the UK.
This gives the flexibility I need when travelling. I have had no problems with the account at all.

 

[growler]

Thanks Jeduardo, I had a quick look at the link, it looks like a lot of reading so hopefully have a browse tomorrow.
You say "Worst case scenario is that you own more than one property and are cashing out. The capital gains rate is 15% but the bottom line is more like 5-6% of the gross gains."
Does this apply to someone owning more than one property or also to someone owning just one property?

Are these 50.92% and 11.51% deductions standard amounts or variable?
What exactly are these deductions for?

If they are "automatic" deductions for all then why is the base rate for CGT 15%? Surely it would be easier to just say the CGT due is 5.5% or 6% of the profit made?

Any answers to these questions would be greatly appreciated.

 

[jeduardo]

You will have to check the fine print but if you only own one property and haven't sold any property within the last 5 yrs then you are exempt from CGT up to property value of R$ 440000.

The 15%, 50.92% and 14.24% deductions are fixed for 2009 declarations. These deductions were implemented under different laws at different dates thus why they can't just lump them into a single composite rate.

After the 3 reductions above take 15% and you have the amount due.

The downloaded program is pretty straightforward and should only take a couple minutes to fill out.

The bottom line is that if your accountant is charging you a flat 15% then he is probably ripping you off.

 

[debzor]

The argument about opening a bank account as a person without any residency status is not one about whether this is allowable under Brazilian law - it clearly is.

It is about the regulations that have comparatively recently been imposed on any banks that open such 'C5' accounts.

Basically these state that any bank opening such an account must produce a raft of paperwork to justify and prove each and every transcation, and that they are ultimately totally responsible for the conduct and management of the account.

Hence their (quite natural) reluctance. I would imagine that more banks like Rendimento will start charging crazy monthly fees to foreigners, to help offset the increased costs, until this regulation is lifted.

 

[debzor]

You will have to check the fine print but if you only own one property and haven't sold any property within the last 5 yrs then you are exempt from CGT up to property value of R$ 440000.

The 15%, 50.92% and 14.24% deductions are fixed for 2009 declarations. These deductions were implemented under different laws at different dates thus why they can't just lump them into a single composite rate.

After the 3 reductions above take 15% and you have the amount due.

The downloaded program is pretty straightforward and should only take a couple minutes to fill out.

The bottom line is that if your accountant is charging you a flat 15% then he is probably ripping you off.

I have just sold a property here, and have been advised by my accountant that I will have 180 days to reinvest the proceeds or pay CGT on the gain.

The chart previously quoted will only help those who have owned property for several years, as it effectively allows for depreciation going back to the 80's and up until 2005.

As I bought two and a half years ago, it will not help me.

 

[growler]

I have just sold a property here, and have been advised by my accountant that I will have 180 days to reinvest the proceeds or pay CGT on the gain.

The chart previously quoted will only help those who have owned property for several years, as it effectively allows for depreciation going back to the 80's and up until 2005.

As I bought two and a half years ago, it will not help me.

Interesting Debzor, another angle on how CGT works, does make sense though.

There does seem to be some confusion here in general.

I was always under the impression it was 15%.
My accountant said between 10-20% but "probably 20%!! No surprise there.
Then there are the "automatic deductions" bringing it down to 6%
now, the automatic deductions only apply on older properties (who defines what is old?).
Regarding the reinvestment, I was originally told 180 days but more recently it was 30 days.

Are there any accountants on this site I wonder?

 

[jeduardo]

now, the automatic deductions only apply on older properties (who defines what is old?)

Did you fill out the form using program GCAP2009.exe?
It figures out what deductions to apply based on acquisition date and sale date.

Rollover is 180 days, not 30.

O art. 39 da Lei 11196/2005 preceitua:

Art. 39. Fica isento do imposto de renda o ganho auferido por pessoa física residente no País na venda de imóveis residenciais, desde que o alienante, no prazo de 180 (cento e oitenta) dias contado da celebração do contrato, aplique o produto da venda na aquisição de imóveis residenciais localizados no País.